Department of Labor Proposes New Overtime Rules

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BY: Cynthia L. Effinger

On March 7, 2019, the Department of Labor proposed a new overtime rule raising the minimum salary threshold, the point at which employees in certain classifications of jobs become exempt from overtime rules; they plan to raise it from $23,660 to $35,308. Employees making below that threshold, as well as those whose positions do not fall under the exempt categories, must be paid overtime for work performed in excess of 40 hours per week. Additionally, the exemption for “highly compensated employees” would rise from $100,000 to $147,414 per year. The proposal contains a commitment to periodically review the salary threshold, but there is no automatic mechanism for adjusting the threshold. The proposal for raising the salary threshold will now be subject to a 60-day public comment period.

The new rule by the Trump Administration is similar to, but not as aggressive as, an Obama administration overhaul of overtime rules proposed in 2016. The Obama administration proposed an increase in the salary threshold up to $47,000 in the first year, with automatic increases at regular intervals. This rule was held up in the courts, where it effectively died and did not go into effect.